Global Risk Is Now a Central Focus of In-House Crisis Response

As an in-house lawyer, you’re expected to understand and manage risk for your company. It’s complicated enough when your company faces risks that you’re trained as a lawyer to deal with—contractual terms, intellectual property, regulatory issues, and the like.

But when your company is vulnerable to fast-moving global and geopolitical forces (and most are these days), it takes the challenge of your job to a whole new level of complexity.

A couple of years ago, we thought things would get easier if we could just get on the other side of Covid-19. But the post-pandemic world has brought a wave of changes that is forcing business, and legal departments, to adjust. We are contending with a hybrid and remote work environment. Artificial intelligence. Legal challenges to DEI and ESG initiatives. Far-reaching regulatory clampdowns on Big Tech. Criminal prosecutions of business leaders.

And it’s hard to ignore the geopolitical risks that legal departments are confronting this year and beyond—the Ukraine war, an ever-widening conflict in the Middle East, and drought that threatens the key Panama Canal trade route, just to name a few. A warming planet, and increasing border tension between the US and its biggest trading partner, Mexico, add to the list of concerns.

The Economist dubbed 2024 the biggest election year in history, with the prospect of destabilizing change as 76 countries go to the polls and Americans vote in a pivotal election.

Companies that respond best to crises are often those that have anticipated them and planned. This isn’t just a big company exercise. Small companies in particular face vulnerabilities from geopolitical events. Look to your left and right—if no one in the company is outlining a strategy for addressing geopolitical risks in 2024, the job is probably falling to you as the in-house legal leader. Congratulations.

You don’t have to do it alone. Start by figuring out who needs to sit at the table with you. While the obvious departments will need to be in the virtual planning room such as HR, finance, and business operations, it’s hard to think of a team that doesn’t need a voice at the table in what is effectively a crisis management planning exercise.

Be inclusive, and don’t be afraid to engage outside help to educate you and keep you constantly updated in areas where you have key interests. You don’t have to be an expert on what’s happening in far corners of the globe—you just have to know who to ask and where to look.

Get rolling with a fundamental question: Where? Rather than label it as a risk management exercise that may just lead to complaining about another task, have fun with it. Call it the “where in the world is [your company name]” game, and ask each department to fill in a world map with information about where they see key company stakeholders.

Where are all your employees and contractors? That used to be as easy as knowing where your offices are, but in today’s remote/hybrid work world, your employees might be working from just about anywhere. Where are your suppliers located, and where do your key raw materials come from? If you’re a global company, this exercise can quickly get complicated.

It’s tempting to throw up your hands and say, “Everywhere!” But granularity is important—not all your stakeholders are “everywhere,” and different geopolitical issues will pose different challenges to different groups connected to your company. Know what you’re dealing with and where it is.

In the end, you may be surprised to learn what’s going on in different areas of your company that don’t often get your attention. You may learn about a small outside development team in Eastern Europe, a key influencer in Taiwan, or a supplier in Israel. That’s the bonus here for you—it’s not just a risk exercise, but a learning journey about your own business that will make you a better lawyer.

Armed with an enhanced understanding of your business and your stakeholders, the hard work begins by identifying geopolitical risks that might impact you. Once you get past the obvious global hotspots, it’s a creative “what if” exercise that’s well-suited to an offsite location with pizza and a whiteboard. Avoid the temptation to just focus on the negative—risk is a two-sided coin that has both potential threats and opportunities.

The output of your work should include a visual, a matrix with both a size of risk and likelihood axis. The upper right quadrant—high risk and high likelihood—is a great place to begin your offsite work, though lower risks that can be easily mitigated or exploited are often excellent places to focus as well.

The business may decide to make changes based on your risk work: new suppliers, new distributors, diversified markets. But you don’t have to solve all the hypothetical geopolitical risks that you identify. In some instances, you may develop contingency plans that will give you a head start in case of a crisis.

Or you may decide that the disruption caused by ameliorating your risks outweigh the risks themselves. But the work should at least leave you better-informed about your real exposure to geopolitical events and better prepared to evaluate options quickly, under pressure, when crisis does strike.

Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor.

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